Tim Schafer: I've always been a proponent of the idea that technology doesn't matter to game design. The example I always like to point out is Tetris, one of the greatest games ever made. And it could have been made years before it actually was - it was made on the Atari 2600 - and it would have been just as fun. It wasn't the technology that was holding the game back; it was the idea. So right now there's some awesome game out there that someone hasn't yet figured out how to work with current hardware.

TG: What inspires you?

TS: Working in a team. The games industry has some really creative people. It has a great mix of brilliant programming geniuses, and then you have your crazy creative artist, your animator ... there's all these people brainstorming on this project. So it gets a collaborative energy going, and that's really inspiring. And then, seeing people enjoy it. I remember it when I was playing Mario 64; that sense of wonder around being in a crazy world. And when the doors to the cellar opened, and you found a whole new area in the castle ... these things are what are remembered by fans. When I read fan mail, and fans describe having the same feeling playing Psychonauts ... it's great to be able to make that experience for someone else.

TG: You're known for creating some of the most memorable characters in gaming. How do you ensure they don't become generic videogame "markers"?

TS: For every character, I think about who they are, their story, what they are, and who they were before their game started. What was their life like? Where did they grow up? What were their parents like? If you figure that stuff out for every character, you can't make them all the same, so you come up with unique stories for each one. If you don't do that, you just think, "Well the character walks into the room, and there's a girl there." And all the choices about what she looks like and what she says will be generic; you tend to pull from your library of clichés. But if you say she's from Scotland, and she's an only child, all of a sudden you start making choices and dialogue that are unique to her.

TG: Do you strive to make your games unique?

TS: When we're brainstorming, if we come up with an idea and someone says, "No, I've seen that in a game before," it goes out the window. It just doesn't feel right. There's no point repeating what's been done before.

TG: Not that it's difficult to find something new, given how limited in concept most game content is ...

TS: Yeah, there's like six allowable sources - there's Star Wars, Blade Runner ... you can do The Sopranos or Scarface. And then there's Tolkien-esque fantasy, and that's about it. And players play these games, and then they go make their own games by recycling those ideas, and it just churns and churns, using the same material. That's why it's easy to pull from something else. In Grim Fandango, we pulled from Mexican folklore. That's just the tip of the iceberg of all the stories and worlds out there.

TG: But publishers tend to shy away from new concepts. Psychonauts had a few troubles finding a publisher ...

TS: Well, it's a tough position to be in. I want to say, "Publishers should be more daring," but if you had $10m of your own, what would you do? If you had a choice between investing it in one game that's based on Spider-Man, and the other game was just something some guy made up, it would be tough to say, "Okay, I'll give my $10m to the completely unknown thing." So I feel for them. That said, if you look at the sales figures, the ratio of hits to misses is really low; it's one in 20, or something like that.

Publishers are very risk-averse, so they lean towards licenses and sequels. But the fact is that even those are not guaranteed hits. So, if "playing it safe" does not guarantee hits, they might as well leave it up to the really creative, risk-taking people, because they couldn't do any worse.

TG: Are you finding ways to circumvent the problems creative projects face? How do you feel about digital distribution, for example?

TS: Definitely, we're looking at distribution by download. It's a promising avenue. So far, for me, there's always been at least one publisher interested in innovation. It's a lot of work to find that person, but we've always managed. We're definitely interested in downloadable content to make smaller games, just because it would be nice to make a game in less time than most modern games, which usually take about two to three years. Back when we did Monkey Island, that was only about nine months.

TG: Other than time and money, what other factors do you have to consider now that you didn't before?

TS: Well, it used to be that you'd make a game, and people would play it once, and that would be the experience. In the next generation of games, there's a much bigger emphasis on being able to play the game multiple times, customising your game, and so forth, so you can't just think about the core game any more, but how it can be customised and replayed, and that's a lot of work.

TG: So people are playing games for longer periods of time?

TS: People are now expecting that when the "main" game is over, they can keep playing. You know, if you finish Resident Evil, it wraps around, and you get more missions. You get different costumes, and variations, and so on. But while this is happening, the main plotline is getting shorter. It's getting down to eight hours, when we used to strive for 40. It's getting to the point where I just finished the latest Tomb Raider in a couple of nights. But you can go back and play it again in a different outfit!

TG: Do you find yourself conceding to these trends so your games have a better chance at commercial success?

TS: Mostly, I get an idea for a game, and then make it. Of course, you're always trying to make a game that will appeal to the largest amount of people, because you want people to see your work. I've never made a concession that made the game worse; there's always a solution that solves both problems; it can be creatively satisfying and appeals to the people. It just takes more time to work it out.

TG: So you're aiming for the mainstream?

TS: I would like to reach non-gamers. It's always great when guys come up to me who are gamers and represent my usual audience, but they'll say, "You know, Psychonauts is the only game I can actually get my girlfriend to play with me." And I'll say, "Man, I want to sell more games to your girlfriend! And your mom, and all these people who would really love it if they knew about it."

TG: Psychonauts appealed to gamers and non-gamers, but it didn't sell well. Why?

TS: There are things you can control, and things you can't. The things on our side are making the right game and making a good game. And on the other side, there's marketing and distributing. I think we made a good game. Did we make the right game? At the beginning of the process, the platforming genre was still pretty hot. But by the time we finished, platformers were definitely forbidden. You couldn't talk about making stylised art in games. You had to talk about making a gritty, urban game with a dark main character ... shadowy, half-evil, et cetera. It had distribution problems, too. People couldn't find it in stores. I go to stores now, and I see games that I know didn't sell as well as Psychonauts, and they're still on the shelves.

TG: What have you learned from developing Psychonauts?

TS: Hmm ... It's hard to say, because a lot of the stuff you learn isn't always pertinent. If you look back and say, "Our main character was too young," well, when Zelda appeared, there was nothing wrong with that. It's definitely inspired me to make a game whose main character is of an age more similar to our target market's. People don't seem to want to play a main character who's younger than them. But also, you know, lots of explosions. You can't go wrong with explosions. Our next game is a labour of love, and I want to work on it for many years, and it's a very personal project, but it'll still have lots of explosions.